Musk’s Campaign To Bolster Tesla Makes HeadwayMusk’s Campaign To Bolster Tesla Makes Headway

Is the fallout from Tesla Motors CEO’s sinking popularity hitting bottom?

A week after Elon Musk attempted to rally employees, and implored them not to sell their stock (even though the company’s board chair did just that) investors have responded with a one-week gain of 25%. And after legacy automaker stocks fell after President Trump's announcement of broad tariffs negatively impacting the auto sector, Tesla was the only automaker stock to gain as analysts told investors that the EV maker had the lowest exposure to the tariffs.

One of Musk’s longtime boosters, Cathie Wood, CEO of ARK Invest, told her followers this week that she believes Tesla shares will be worth 10 times today’s price in five years on the strength of Tesla’s robotaxi business. Wood has been one of Tesla's most vocal and longtime supporters. Her firm invested heavily in Tesla years before it became mainstream, has made billions on the stock, and she’s consistently defended Musk and his vision, even during volatile periods.

Wood wrote that her forecast for Tesla shares is entirely underpinned by robotaxis, which Wood says will make up 90% of the company’s value by then. That sounds like the Ford model in which the value of the F-Series truck business is worth perhaps more than the company as a whole.

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Tesla’s value has long defied stock market fundamentals. As Nicholas Colas, co-founder of DataTrek Research, wrote earlier this month in a note to clients, Tesla is a “faith-based” stock. While all equities generally move up and down according to people’s belief in them, Tesla represents a pure example of faith investing because so much of its implied value is tied up in future endeavors rather than current reality. In Tesla’s case, this translates to hopeful future earnings from robotaxis, not present sales and earnings from sinking EV sales in the U.S., Europe and China.

Tesla is strategically targeting several cities and countries for the introduction of its robotaxi service, focusing on regions with favorable regulatory environments, robust infrastructure and big market potential.

But who’s to say that what is making Tesla less popular today  – Musk’s far right politics and his willingness to publicly meddle in elections with his vast wealth – won’t also impact governments’ willingness to permit Tesla’s robotaxi service, as well as consumers’ willingness to use them in large enough numbers.

In the U.S., Tesla plans to launch its autonomous ride-hailing service in Austin by June. Texas offers a lenient regulatory framework for autonomous vehicles, requiring only insurance and adherence to traffic laws, which facilitates deployment. Musk also relocated Tesla’s headquarters to the state, likely giving the company a leg up when it comes to regulation.

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In California, Tesla has obtained a permit from the California Public Utilities Commission to operate a transportation service for its employees using Tesla-owned vehicles. While this is a preliminary step, further approvals are necessary to offer public autonomous ride-hailing services. Tesla sales are falling rapidly in California now, and the company could find plenty of resistance from both progressive regulators and citizens in the state that is the world’s fifth-largest economy.

Global Markets

Tesla is set to enter the Saudi market with an event in Riyadh on April 10, showcasing its electric vehicles and autonomous products, including the Cybercab robotaxi. Boycotts and demonstrations against Tesla have not been seen in the Middle East, but the company is going to need to dominate more than this market to realize Musk’s and Cathie Woods’ dreams for robotaxis.

Tesla faces enormous challenges in Europe and China due to stringent regulations and competitive markets. In Europe, Tesla’s sales have declined 42.6% so far this year, despite an overall increase in EV registrations. Analysts have adjusted expectations for Tesla’s autonomous services in these regions, citing regulatory hurdles, strong local competition and mounting opposition to Musk’s political activities. In China, Tesla’s fortunes are sliding as BYD and other Chinese domestic brands are becoming more popular, and China has a track record of favoring domestic brands over foreign.

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The global robotaxi market is projected to grow significantly, with flowery and probably unrealistic estimates it could reach $45.7 billion by 2030. Asia-Pacific, particularly China, is expected to dominate this market due to substantial investments in autonomous vehicle technology and supportive government policies. But Asia does not favor Tesla for long-term growth that would result in Tesla gaining a lead market share.